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Strategies & Market Trends : A Study of Covered Strangle in a Rather Neutral Market
QCOM 170.91-1.2%Nov 8 9:30 AM EST

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To: PAL who wrote (16)8/20/2001 6:12:49 PM
From: PAL  Read Replies (1) of 23
 
Memo to the diary: August 20, 2001 after the close:

Dow 10,320.07 +79.29 +0.8%
Nasdaq 1,881.35 +14.34 +0.8%
S&P 500 1,171.41 +9.44 +0.8%
QCOM closed at 63.71 +2.15 or 3.49%


Based on last Friday's close, the five strategies stood as follows (including the value of the holding as of 8/17/01):

a. 100% cash : $ 110,000 value: $ 110,000

b. 100% cash/short put : $ 121,400 value: $ 121,400
see post # 6 :
Message 16231120

c. covered strangle : 1,000 sh of qcom plus $ 57,650
value $ 119,210
see post #5:
Message 16229088

d. buy/write : 1,800 sh of qcom plus $ 5,510
value $ 116,318
see post #11
Message 16233058

e. buy and hold : 1,767 sh of qcom plus $ 4.25
value $ 108,781
see post #16
Message 16234140

Did not do anything today on QCOM: it is not near the low (to sell puts) nor the high (to sell calls) of the trading range.

I will so a covered strangle again whenever the environment is favorable. This will be an actual trade. I will then compare with other strategies.

When I do the actual sell on the calls, I will also enter a similar "pseudo trade" on buy/write, and conversely, when I make a real trade of selling puts, I will do a "pseudo trade" for 100% cash/short put. The appropriate "pseudo trades" will also be performed if the actual shares are sold/bought.

Until the next real trade.
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